WASHINGTON (Reuters) – Americans are beginning to feel the pinch from Washington’s decision to embrace austerity measures aimed at bringing down the nation’s budget deficit.

Paychecks across the country have shrunk over the last week due to higher federal tax rates, and workers are already cutting back on spending, which will drag on the economy this year.

In Warren, Rhode Island, Ben DeCastro got his first paycheck on Friday in which taxes on his wages rose by 2 percentage points. That works out to about $30 a week.

“You sit back and do the calculation, and that’s $30 I’m not going to spend at a restaurant,” said DeCastro.

He said he worries that people hit by higher taxes will spend less at the chain of furniture stores where he works as a marketing manager.

It blathers on about taxes.

First, let’s review why people feel compelled to pursue austerity. Simply put, in the context of it being used today, is that various governments have either gone broke or are on the precipice of going broke. They ran out of money. So many, logically, decided to pursue austerity measures to make the various governments solvent again. So far so good? Well, maybe not. It seems there is some confusion as to exactly what austerity means. For that, we should probably turn to a dictionary. It seems millions are under incorrect assumptions as to what the word means. As a public service, I’ll clear it up.

2. economy measure: a saving, economy, or act of self-denial, especially in respect of something regarded as a luxury

3. economics enforced thrift: thrift imposed as government policy, with restricted access to or availability of consumer goods

Okay, did we all read and understand those words? I know the regulars here did, but we do get a visitor from time to time who may have a difficulty in understanding what this states. If so, just ask and one of the many commenters here will be happy to explain. But, in common parlance, and in context of the government spending, this means to make cuts to government spending. Notice what it doesn’t state or reference. It says nothing towards taxation. While increased taxes are often accompanied by proclamations of austerity in an effort to balance a budget, taxation is not related to austerity, in this context.

“Austerity isn’t an elective course. Austerity is something that happens to you when you’re broke.” – David Stockman

So, when people rail against austerity, ask them what the alternative is? The various nations have already spent so much beyond their means that they cannot spend beyond their means anymore. It’s what happens when you’re broke.

So far so good? Right? Well, maybe not. Even the people railing against austerity would surely agree with what has been stated so far, right? They would say, “so what?”. It isn’t working. It isn’t working in Greece or Spain, or any other nation! You see, there are some people under the misguided impression that the various nations have actually engaged in austerity. No, they haven’t. And, the US hasn’t come close. It isn’t the austerity that isn’t working, it is the increased taxes which inhibit economic growth which isn’t working. Here’s a nice graph that illustrates what I’m talking about…..

Not only have we not seen any cuts, we haven’t decreased our spending even less than the Keynesian-fantasy-come-true years of 2009 and 2010! You know, the bailouts, the stimulus….. those were one-time deals! Except we’re spending more now than then!!! No one is spending less than pre-recession levels. And, it’s not working. It will continue not to work until people honestly embrace the notion of austerity and quit raising taxes along with the imaginary spending cuts! Imbeciles.

Now, the people I’m calling imbeciles are the ones who haven’t bothered to look. The ones who already know there hasn’t been any real austerity measures and proclaim austerity doesn’t work are different creatures altogether. They are more vile than stupid. And they mean to do real harm to society.

Two quote from the twentieth century’s most successful propagandist –
“The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly – it must confine itself to a few points and repeat them over and over”
and
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”
Thank-you Joseph Goebbels for educating big government in the art and correct application of deceit. From what has been written above governments on both sides of the Atlantic have learned Joe’s missives well and are putting them to work

The UK is the hardest hit of all of the countries affected by the banking crisis. RBS was, briefly, the biggest bank in the world and now it is a lame duck run by the government with billions in liabilities. HBOS was another global British bank that was effectively liquidated. Given this background the UK is doing quite well, the essential element is not to increase the rate of public spending. You do not need to reduce spending but it must not be rapidly escalated. See Sydenham’s Law of Public Expenditure and Economic growth